Deutsche Bank to set up innovation division to drive digital transformation

Agile teams

The bank will create agile teams where “product owners in business and infrastructure divisions will lead teams of technologists, using agile principles, to continuously work on products and ensure progress meets their expectations”.

It will also increase the proportion of software engineers in the workforce and better support and motivate them, as well as “reduce the burdens that slow them down.”

There will also be a programme of IT simplification. “While we have made progress in removing applications and simplifying our technology, our efforts are hindered by how inter-dependent our environment is,” said Leukert’s memo. “We will decouple applications and use common reference data sources to reduce complexity. Essentially, we will continue to retire applications and ensure the ones that exist can work with each other.”

The bank has also committed to more use of the cloud and will gradually migrate systems to it. “We’ll bolster our cloud strategy, but, recognising this won’t happen overnight, we’ll also commit to investing in our legacy infrastructure and platforms on which the bank operates today.”

Leukert said long-term tech budgets will be set so budgets aren’t cut when objectives change.

Speaking to investors in July, Deutsche Bank CEO Sewing said: “The aim is to position [the bank] as a technology company, be a leader in digital banking with new ideas, and establish systematic research and development for innovations through combining state-of-the-art technology with analyst know-how.”

“Digitisation offers new competitors, such as cross-industry entrants or financial technology companies, market entry opportunities,” said Sewing. “We thereby expect our businesses to have an increased need for investment in digital product and process resources to mitigate the risk of a potential loss of market share.”

The announcement marks significant change in the corporate culture which is vital if Deutsche Bank is to compete with new players in the financial services sector.

According to Peter Schumacher, CEO at Germany based  business consultancy the Value Leadership Group, Deutsche Bank’s leadership is saying all the right things and with a lot of candor.

“Deutsche Bank’s statement is not abstract. They are seeing the world as it is. They have positioned their change programme as an opportunity,” he said. But he added that they have also raised expectations. “History at Deutsche Bank has shown that after the dust settles everything remains fairly unchanged.”